Oracle forecasts sales decline

MikeTarsala

REDWOOD SHORES, Calif. (CBS.MW) - Oracle's top executives said Monday they expect no growth in fiscal second quarter profit compared with last year, and they forecast a 15 percent decline in software license sales.

The company cited a continuing decline in corporate spending on information technology during the economic slowdown.

Jeff Henley, Oracle's chief financial officer, said in an interview that the company did "as well as could be expected" in its fiscal first-quarter. The company announced Thursday that its first quarter earnings rose 2 percent, and that it beat analyst earnings expectations with help from cost cuts and services sales.

Henley said his best guess is that earnings growth will be "relatively flat" for the current quarter, ended November, compared with the year-ago figure of 11 cents a share.

Henley said he expects sales of software licenses to be down about 15 percent for the second quarter, compared with a year ago, because of customer spending delays brought about by uncertain economic conditions.

Henley said he expects the company will have difficulty beating year-ago numbers until its fiscal third quarter, ended February, when Oracle sees easier sales comparisons. Executives pointed out that sales of Oracle's software to dot-com companies started to wane early in 2001.

"We feel good that we've been able to maintain profitability without having to have wholesale job cut backs," Henley said. "We're investing in research and development, and waiting it out until the economy comes around and business picks up."

Oracle's fiscal first-quarter earnings rose to $510.6 million, or 9 cents a share, compared with 8 cents in the year-ago quarter. The company beat its 8-cent earnings target, according to Thomson Financial/First Call.

The company released its earnings Thursday, but postponed its analyst conference call until Monday.

Oracle's
ORCL, -0.92%
earnings release was the first major corporate report following Tuesday's attacks on New York City's World Trade Center and the Pentagon in Northern Virginia.

First-quarter operating margins increased to 33 percent compared with 29 percent in the same period last year.

Sales of $2.24 billion were roughly flat with the $2.26 billion the company reported in the same period a year ago. Services sales rose to $1.51 billion, up from $1.45 billion in the same period a year ago. Software license sales declined 9 percent to $731 million, down from $807 million in the year-ago period.

Oracle's operating expenses dropped 7 percent to $1.5 billion. The company cut its cost of services 9 percent to $610 million, while trimming sales and marketing expenses 6.5 percent to $535.5 million. Research and development spending rose less than a percent to $253.3 million.

Shares of Oracle lost 45 cents, or 4 percent to $11.01 in heavy Nasdaq trading Monday.

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